April 30, 2014

The Open Organization With Philip Foster From Maximum Change

About the host

Jacob Shriar
Growth Manager
Officevibe Twitter
Montreal, Canada
Passionate about company culture. On a mission to make work better.

About the interviewee

Dr. Philip Foster
Maximum Change Twitter
Nashville, TN
<100 people

Video Summary

Dr. Philip Foster, author and CEO of Maximum Change talks to us about his new book The Open Organization, and how companies can be more open and flat.

Related resources

Video Transcript

Jacob Shriar: Hello, everyone I’m Jacob Shriar, growth manager at Officevibe. I’m here with Dr. Philip Foster, who’s an author, and the CEO of Maximum Change. So, Philip thanks so much for being here with me.

Dr. Philip Foster: Well, thank you, thank you for having me here.

Jacob Shriar: Awesome, so maybe, before we get started, if you can, maybe, just give us a quick background on you, and a quick background on Maximum Change, and maybe some of the books you’ve written, and just a quick bio, quick background.

Dr. Philip Foster: Sure, I’d be glad to. Twenty four years in leadership and business, mostly in executive level, managerial level. About 2005, I left the corporate world to go to work for myself, starting Maximum Change. We originally started as a coaching firm, because we saw a need out there to work with executives in a life coaching format, and as the time progressed, moved into more of a consulting role with coaching as an add on. Around 2010, I entered a doctoral program, and started my journey really in unpacking what we’re going to talk about today the idea of flat organizations. As a result of that, I wrote two books. One of which, is getting ready to release in September. The first one was really Organization 3.0 and that was more of an introduction to theory and how we got here today.

So, I looked at from the beginning of time on to the present day, entering into the 21st century with the idea that we cannot run organizations with 18th, 19th, and 20th century ideas, anymore. That moved me into the book that will release in September, called the “Open Organization”. Where I wanted to take the concepts that I have seen out in the blogosphere, on the notion of flat organizations agile and the like, and bring all those autocracies under one heading called the “Open Organization”, and that’s really how I ended up today, because I looked around, and I said, “You know, organization’s the way we do business, it really sucks, and there’s a better way to do this.” So, that’s how we ended up here with this idea of the “Open Organization”.

Implementing A Flat Organization

Jacob Shriar: Okay, cool, thanks for that. So let’s dive a little bit deeper into, like you said the book that’s coming out in September. Let’s talk about flat organization. First of all, well, let me ask you this, do you have any experience? Any actual, kind of practical experience, I’ll say, in a flat organization, kind of dealing with leaders who are maybe going to implement flat organization?

Dr. Philip Foster: Actually, back in the mid 90’s, when I left my undergrad experience, and went out into the corporate world. I actually worked for a software development company and I was their office manager. Now, I think that was really the first time I actually saw something in the way of flat, or agile, actually happening and working in front of me, because we had developers that needed to come up with unique ideas. We didn’t call it flat, or open, or open source or anything like that, back then. We just called it doing business, and so, I was there for about 4 years under that experience, and as I left that experience, I realized there were some things that they did really well, and some things that they didn’t do so well, and that really started my journey on this idea of how do we tap into happiness I guess is one of the buzzwords we see today of Zappos’ fame and the like.

But even back then, I was curious, how do we create a culture within an organization where everyone enjoys what they’re doing, and they just get work done, and so that would have been my first foray into it. Since then, I’ve done a lot of actual research, and hands on study in those arenas. I actually did an onsite study of Dell Computer. They have a location in Nashville, Tennessee which is in my backyard. I’m in Middle, Tennessee, and I actually spent some time with GitHub out in San Francisco, and reviewed how they’re doing things, and what I’ve discovered is these organizations do some really cool things, but they’re not perfect. I’m not sure I found a perfect organization yet because the idea of open is a constant transition.

The Negatives Of A Flat Organization

Jacob Shriar: Cool, well, thanks for that. Well, do you mind digging a little bit deeper into some of the flaws that you noticed in all of your research? I’d love to understand what goes wrong, because it sounds like an amazing idea in theory. I’d love to really learn what some of the negatives are.

Dr. Philip Foster: Well, I think if I were just to take if from a general application, if we were to lay it across some general business, general industry, we have a real problem with the lexicon, how we call things what they are. Just as an example, if you’re looking in a traditionally trained, or classically trained business school leader which most organizations have at their helm. If you say the word open, or flat, or agile, most of these guys, and gals, are starting to imagine in their brains that this is some sort of chaos, or that no one’s in charge. What we really know, in fact, is that there is a firm structure in all of these ocracies that we come up with, but I think the biggest problem is the lexicon, how do we call it what it is and it translate well across the other industries. That’s one area. The other areas, we don’t really have a set pattern. We have meritocracies, holocracies, matrix, open.

You can just list a whole bunch of them, but they don’t really translate well with one another, because they’re all doing something slightly different, and if you talk to someone who is a champion for one of these areas, they will insist they have the best model. When in fact, I think, each one of them have something that we can embrace together, but they have their flaws. If there is a breakdown somewhere in the system and we don’t follow, maybe, the first principles, or we don’t have a good governance in place, those are problems that could shelve the whole idea of an open system within an organization. The other issue is these systems really are best when they are created from the beginning. We have a start up situation. That’s usually when they’re best taken on. The problem is many organizations, and I’ve got books, you know, all behind me of great thinkers.

Many times, someone will get a hold of one of these books and say, “This is a great idea.” And they’ll run with it, and it’s the flavor of the month, and it just fails, because they don’t take the time to fully embrace everything that is involved with that. So, when you’re talking on this idea of an open from an established origination there’s a lot of culture change. There’s a lot of embracing new ideas, and sometimes letting go of preconceived notions of how we do business. One of those is the idea of the top down hierarchy that we deal with on a regular basis.

Measuring The Success Of A Flat Organization

Jacob Shriar: Is there any way to, I’ll say, measure the success of implementing a thing like this? So, let’s say, you transition from a very top down hierarchy to more of a flat thing, are there metrics, or is there any kind of way to measure the success of that transition?

Dr. Philip Foster: Well, there’re several ways that we can measure. Most of it is in the format of how we interact on a day to day basis, internally. If you have individuals starting to set up silos, if you will or their own little area, and starting to protect their area that it’s broken. It’s not working. So, that’s one way to measure, is to go in there and look at how people are sharing information, sharing responsibilities. The other area is in looking at the leadership, and how they’re actually embracing the change that they’re talking about. If they’re not bought into this idea from the very top, and I’m talking stakeholders beyond the CEO, maybe even the board of directors, or bench capital firms or the like. If there isn’t a full buy in from top to bottom, side to side, it’s broken, and so measuring it is looking at it from a cultural standpoint, even a leadership standpoint.

How are the leaders connecting the dots, how are they empowering, and it’s not just empowerment, but it’s also an idea of coming along side of your team, and mentoring them. Not so much telling them what to do, but showing them how to do it. That is really the essence of success, right there, is how is the leadership in a mentoring roll and sometimes they have to be taught to do that.

Common Things Leaders Get Wrong

Jacob Shriar: That makes sense. What are some common themes, or really common things that you see leaders getting wrong, based on all of your kind of experience consulting with these guys?

Dr. Philip Foster: Well, I think that the leadership in an open system, what they’re getting right is the idea of connecting the dots between the workforce, the followers that they have, and empowering them and letting them do their thing. I think, the danger we get into, though, with that is when they get to the point where they empower them so much that they just disconnect, and they just step away, and that’s when chaos really starts to happen, because you don’t really have someone there spreading the vision, or continuing the spur on the vision. Share the vision, share the first principles. You know, we think about an apple computer, Steve Jobs, one of things that he did really well was share the vision.

There’s a whole host of things that people can say he didn’t do well, as far as his leadership style, but what he did well was he shared the vision. He had first principles; there was a series of them. He was constant in them. He always checked back with them. The danger in an open system is when we don’t set a solid set of first principles, and we continue to visit them on a regular basis, share them with the individual on a regular basis. One of things I liked about GitHub was every Friday they had this thing called “beer thirty”, and they, basically, had a meeting with everyone that was involved in the organization, and some of it was streamed video wise. I thought that was really cool, because they had shoutouts and they were just, kind of, asking questions on the Q&A side, and it was just that chance to have a connection with the workforce that was dispersed.

They did those things really well. One of the other things that I think they do well is most of these executives, even though they’re in a younger age group; they’re very, very adapted to the business world. They know what they’re talking about. They know they’re business. They’re very smart. The challenge is when you mix someone that’s a classically trained manager coming into that mix is that their heads but, because you need to be bottom lined in that philosophy of the way things are done, and that can be challenge when you bring in outsiders into a flat structure.

Leaders Naturally Emerge In A Flat Organization

Jacob Shriar: From, and correct me if I’m wrong, but from what I understand about a, sort of, flat and open type of system is that the way it’s sort of set up is that there are no leaders, and everyone’s kind of on the same level, but then just sort of naturally, let’s say you’ll have, maybe, extroverts kind of taking on leadership role, or people who are generally more, you know leaders, in their own sort of way will just, sort of, naturally, organically become, almost, leaders of their team, or their system. First of all, is that true, and second of all, does that, like, does that really work? I mean is that good? Are there any flaws in that way? What are your thoughts there?

Dr. Philip Foster: Well, I think this leads into that comment that I made earlier about the lexicon. When we use the words boss-less, or leaderless in that context you start to lose people, because we get that idea that no one’s in charge. Really, the focus of, in my mind, the flat or open organization is that there’s a focus more on the purpose than a person. If you looked at Holacracy for example, the focus is on the constitution, or the charter, of the organization. So, it’s really focused on that, on the purpose, whether it be first principles, a charter, constitution, or other document it. The idea is what is leading us. If we looked at a government system, I’m in the U.S., we have a constitution. In a purest way the piece of paper is what’s in charge. It’s not a president, or congress, or senate, and using used government terms.

So, I think the trouble we get into is this idea that flat means no ones in charge, and that really isn’t true. I mean, if I look at some of the organizations that I’ve gone in and done some research on, there is very clearly a leader, at some level. GitHub has it. Zappos has a leader, Dell, they all have leaders, and I can list a host of others and the like. It’s the idea of empowering someone, modeling how you do something, just setting them free to do their job. The constitution, the governance, the charter, whatever you want to call it is what dictates whether or not you’re in or out of line with what needs to be done.

The Best Flat Management System

Jacob Shriar: Is there any type of system like Holacracy or any of the ocracies I guess that you like the best? Is there one that you think, kind of, is the best system, or like you said before, they all, kind of, have their pro’s and con’s, but is there, you know, if you had to pick one is there one you would pick?

Dr. Philip Foster: I would hedge on the side of safety and say no I wouldn’t pick one of them. I like what each one of them does, in a way. What I would say is that they all share similarities. They have some sort of central focus. Typically, it is your purpose, whether it be a set of rules, or a constitution, a governance, I like that idea that they have this set of rules that say, “Okay, this is what sets us apart. This is how we do what we do, and if you can stay in these guidelines no one is going to question what you’re doing.” So, in that regard I like all of them because they do these similar things. They have a format for sharing information. They have some sort of knowledge commons. Whether it be a software package, or email, or fire chat, or something like that. They’ll have a way of staying in touch with each other. So, that open communication is really important. I think that at the end of the day it’s this idea of empowering people to tap into what makes them happy.

We’re going to work the hardest when we’re doing what we like doing, and we can go back to psychology 101, and look at Maslow’s Hierarchy of Needs, and start going through the list there, and somewhere along the way, in a general business setting something gets broken in this hierarchy of needs, and you have an employee check out on you, and they’re just in the motions collecting a paycheck. I think what’s cool about these ocracies, if you will, these flat, agile organizations is that they’re really interested in empowering these individuals to do what they like to do best, and the cool thing is, they don’t get after them if they’re off in the corner hacking on something else. Whether it be messing around with a 3D printer, playing a video game, maybe drinking a beer, it doesn’t matter, they’re there working. They’re going to get work out of them. They just don’t have to micromanage them.

Accountability In A Flat Organization

Jacob Shriar: Cool, yeah. But something that I hear often when talking about, kind of, you know, an argument, playing the devil’s advocate on, you know, having so much autonomy in letting, kind of, people do whatever they want is there are certain tasks, and are certain jobs that are just un-enjoyable. Like, no one wants to do them. Have you ever found that that problem arises? Where there’s just certain work that just doesn’t get done, because everyone doesn’t want to do them, what are your thoughts on that?

Dr. Philip Foster: Well, I think, at that point there’s a level of, you know, internal accountability. If it’s your turn to turn the dishwasher on in the break room, and you didn’t get it done I think the next person to come along with that responsibility is going to let you know about it. So, there is some sort of a peer pressure, if you will, to get the job done. I do think though that when you’re doing work that you enjoy 99.98% of the time, it makes those times that you have to do something less enjoyable more tolerable. If you’re doing the less enjoyable all day long it becomes more difficult, but when you’re tapped into the things that, for example, I work for myself. I do business consulting, but if I get tired of sitting at the computer and working, or working with a client I take a break. I’ve got a TV in my office, I can watch the news, I can watch a TV show, I can do what I want, and makes that time a little more enjoyable.

Now, obviously, I have to get work done, but I have that levity to move along and do something a little fun. I may break up my day and go for a walk. I live steps away from the woods. So, I can go in the woods, and go for a hike. It’s that type of idea that we need to instill in our workforce when we have an open setting. To allow them to do things that they want to do when they can. The other thing is it allows us to have more of a disbursement of the workforce. Let’s say, I don’t want to live in Tennessee, where I am now, I want to go live in Eastern Europe for some reason. I can take off as long as I have access to the internet. My boss doesn’t care where I am as long as I’m getting my work done.

Flat Hierarchy Case Study

Jacob Shriar: Yeah, that’s awesome. I’m curious, in all of your research have you ever found a case study of a company going from very traditional type of approach moving to a flat, new style approach, and if you can talk a little bit about what you found in that case study, and, kind of, what happened there.

Dr. Philip Foster: Well, I can tell you that there are several organizations that are trying this idea of flat, in some format or another. One that is more popular in the world is this company called Johnson & Johnson out of the United States. Now, what’s interesting about Johnson & Johnson is that they are using this idea of open, or flat in their innovation department and they’ve been using that for a number of years now. What I do think is that organizations, like Johnson & Johnson, are so big they have to start in a department, or silo if you will. They have not taken that industry wide, or organization wide, rather. For many different reasons, mostly because of the size that they are, but what I think is important, is that organizations that start utilizing this open concept in a division some of that idea bleeds out into the company, even though they may not go fully open, they may start utilizing ideas like open communication.

They might start utilizing this idea of knowledge commons. Maybe, start embracing this idea of first principles, and so what ends up happening is it slowly bleeding out into the organization wide, rather than just trying to take the whole organization open over night. It’s very difficult; you’re having to change mindsets. We have generational differences. Right now, we have three generations in the workforce. You know that goes from the boomers down to millennial, and so were dealing with a swath of different mindsets, and so were having to, really, move a whole group, a whole set of generations on to this new idea, and it’s not easy. We have to do it, you know, step by step. As far as any organizations going full on open, I don’t have any case studies on that right at the moment.

Dealing With Multi-Generational Issues

Jacob Shriar: That’s cool. That’s fine. I didn’t know Johnson & Johnson did that, and that’s like surprising, because they’re really you know, at least they seem very stodgy and old and you know but I’d love to ask you about, like, the other book that you wrote about leadership, wondering kind of, like what you think. Okay so for instance, you were just talking about the three different generations, I’d love to ask you about how we can actually get them all thinking the same way, and all on the same page. I mean, are there any best practices, any tools you would recommend, any, really, any advice that you would give anyone, anyone there?

Dr. Philip Foster: That’s actually a really good question. I do think that I belong to the generation X, the in between generation, right now. I’m in the sandwich there. I do think that we need to help more of the Gen X group to assimilate these ideas. These idea’s really need to be taught in business schools, and there, right now this a lot of chatter in the blogosphere on these ideas, and the notion of flat, and matrix, and the like, but this whole idea of embracing the thought space of open, and flat, agile, matrix, whatever ocracy you choose, really lands on, in my mind, the Gen X generation, because they’re the leaders that are going to push the boomers out, and obviously the millennials are for the most part already embracing this, and since many of the corporations are being ran by Gen Xer’s right now I do think that they do need to start embracing these ideas, or their going to get pushed out as well.

The other thing is, when I’m talking to executives, mostly, Boomer generation I’m telling them that if they have an organization that they’re competing with that is run by mostly millennials and some Gen X, they need to pay attention to what they’re doing, because they’re going to do things differently, and when I say differently I mean what we’re talking about today, this sort of flat, or agile, system, and if they don’t pay attention to that, that organization that’s competing with them is going to eat their lunch, and most of these executives just don’t believe it. They shake their head, and they say, “I don’t, I don’t agree with you.” And I say, you know, “That’s okay. You’re allowed to have that opinion, but you can’t you have an opinion about it after they shut you down, after they’ve sent you out of business.” There are some boomers that are out there that are starting to embrace this idea, realize that it is coming, and they’re trying to understand it.

For the most part, I do believe it’s the Gen X generation that’s going to have to push this through. Again, the millennials are already doing it. We just need to get on board with them. There’s another idea, too, that, this idea of reverse mentoring. Where we need to have younger generations mentoring the older generations, and, you know, this is quite easily done, day to day. We hear jokes about parents, my parents at least; they didn’t know how to work the VCR. So, I was constantly working the VCR when I was growing up. You know, how do you work the microwave, or whatever. My grandparents didn’t know how to work the microwave. So, that’s an idea, reverse mentoring when you go okay this is how you do that. We need that same mentality when it comes to helping develop new cultures within organizations.

Jacob Shriar: Great, thanks for that. I think we’ll end it here, but honestly I just want to thank you so much for taking some time to chat with me, and good luck on the book release in September. When it goes up we’ll post it on this page, on the page, on the site where the video’s going to be, but yeah. Anyways, I just want to thank you again, and hopefully we can do this again soon.

Dr. Philip Foster: Great, I appreciate it, Jacob. Thank you.

Jacob Shriar: All right, take care.

Dr. Philip Foster: Thanks.

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